Stripping more poker machines from Canberra's clubs before they are supported to overhaul their businesses risks hollowing out the community sector and forcing them to shut, a major review of the industry says.
But a recommended four-stage, 20-year transition plan to "a smaller, more sustainable sector" said more needed to be done now to address gambling harm from poker machines.
"Reducing revenue before clubs have uplifted governance and diversified income would risk closures, a hollowed-out community sector and a failed transition," the government-commissioned report said.
The inquiry into the sector was led by the former head of Victoria's powerful gambling and casino regulator, Annette Kimmit AM.
"Gambling revenue currently provides a critical source of operating cashflow, cross subsidising hospitality operations, community contributions, facility maintenance and employment," the review said.
"Participants consistently stated that food and beverage alone cannot sustain current operating models and that replacing gambling revenue and profits is neither simple nor rapid."
ACT Labor has promised to cut the number of poker machine licences in the territory from 3790 to 1000 by 2045.
The report indicated a large sporting and community club with between 80 and 150 poker machines might rely on the machines for between 55 and 65 per cent of its total revenue.
"The ability to transition was a particular concern for small clubs who are already 'largely unprofitable'. It was also stated that it would not be a 'quick fix' and would in fact take 'decades'," the inquiry's report said.
The territory's clubs' industry body, ClubsACT, welcomed the recommendations as a credible foundation for reform and committed the sector to working constructively with the ACT government and all members of the Legislative Assembly.
"Transition must come before reduction. You cannot ask clubs to diversify after stripping away the revenue they need to invest, employ people and support the community," ClubsACT chief executive Craig Shannon said.
"The bridge has to be built before clubs are forced to cross it."
Gaming Minister Marisa Paterson said the government would carefully review the findings and recommendations and provide a response later in the year.
"We look forward to continuing to work with Clubs ACT to transition the industry away from a reliance on poker machine revenue, to see a sustainable club sector in the ACT," Dr Paterson said.
Recommendations in the inquiry included long-term commitments on poker machine reduction targets, planning system changes to help clubs unlock the value of their land, monitoring clubs' community contributions and eventual support for clubs to consider mergers.
The inquiry said long-term success depended on reducing the number of poker machines while maintaining sustained public trust in the role of clubs.
"A material risk to successful outcomes may arise if clubs remain financially viable but deliver reduced community benefit, weakening their function as places of belonging and social infrastructure," the report said.
"Historically, clubs have provided affordable access to food, meeting spaces, social activities and community programming that support social connection.
"Contraction of these functions may allow commercial viability to be maintained while broader public value diminishes."
The inquiry was told redevelopment or diversification projects typically took 10 to 15 years to generate before they generated revenue.
"Without transitional support, this timing mismatch between declining [electronic gaming machine] revenue and delayed replacement income is likely to reduce staffing levels, constrain community grants and sponsorships, increase prices for meals and venue hire, and reduce the affordability of participation in sport and community activities," the review said.
"In more severe cases, stakeholders warned of insolvency, forced asset sales or closure."
